I had the chance to spend half an hour one-on-one with the Prime Minister last week. It's extraordinary. But all these countries, China, India, the United States, are moving at full speed. And so in Europe, in France, we need speed, we need decisions. We also need long-term vision. We are going to soon spend more public money paying interest on the debt than on the education budget or the justice budget. That means it's malfunctioning and something must be done. It can't last too long.
Saint-Gobain, it's a name we all know. Here, we are really talking about the oldest company in the CAC 40, I believe. The oldest in Europe, I think, 360 years. Is it true that 40% of the revenue has been renewed?
Indeed, we have bought a lot of companies since 2018 and we have sold a certain number. So in total, we have divested a little over 10 billion in revenue. So out of the 40 billion we had in 2018.
How long does a decision like that take, from the day it comes into your head to the day it's done?
It's sometimes 6 years that it matures, or 3 years. And at some point we were ready and then we moved fast.
Saint-Gobain, it's 80 countries, 1,600 employees, nearly 50 billion euros in revenue, but fundamentally a leading group that is very innovative since we were long ranked among the most innovative companies in the world.
How often do you look at your stock price?
A little too often. Several times a day, it's always important to take a look at the stock price. We had a great performance over the last few years, we tripled the stock price of Saint-Gobain and in 2023-2024, we had the best performance in the CAC 40 for two consecutive years.
Well, I have a huge problem. This problem is that only 42% of you are watching, listening to this podcast, and are subscribed. It's not normal. It's not normal. Anyway, if you subscribe, it helps us enormously for many things, to get great guests, to do better work, to have a better team. So, subscribe. It's just a simple little click now. If it's just the first time you're listening, that's OK. And if you come back, subscribe now, you'll do us a huge favor. Do it now and I thank you enormously.
Let's go. Great. Hi Benoît, welcome to Génération du Turf.
Hello, I'm delighted to receive you. So it's always a little fun because we look at each other when we prepare episodes and well generally we always know well what the companies of our guests do. Well, there are some, that's all. It's very technical, very complicated. And also in tech, we have surprises. Saint-Gobain is a bit special because Saint-Gobain is a name we all know. We are really talking about the oldest company in the CAC 40, I believe.
And even in Europe, I believe. Or yes.
That's it. I saw that there had been the 350th anniversary about ten years ago.
And then when we were looking with Matthéo, with Clémence, well there are some who say 'But yes, no but I was, I was in the glass business more or less.' Or it's a glass thing, it seems to me that we were talking about Normandy, wasn't it at the glassworks, wasn't it exactly?
Yeah, that's it. Yes. Actually, at the beginning of the history of Saint-Gobain because it started with Louis XIV who was a bit annoyed at paying very dearly for mirrors made in Murano. So we took Italian workers, we tried to make glass in the Faubourg Saint-Antoine, it didn't work and we went to get Norman glassmakers.
And that's where it was then installed in the village of Saint-Gobain. So the Royal Glass Manufacturing became the Compagnie de Saint-Gobain but with indeed the support of Norman glassmakers at the very beginning.
Interesting. Well there you go, so I wasn't that far off. You, what did you see? Did you see fertilizers? No, there are no fertilizers. You don't make fertilizers?
There was a time, a very long time ago, where there was a joint venture with Péchiney that made fertilizers. So that was long before my time and a few generations ago.
After Axel who you saw pass by there, tells me 'But no, but Saint-Gobain is the, it's the toilets, well there must be some, how, or else he's wrong, I haven't seen it but the, what do you call it? In the washbasins, no, you've never done that? Sanitary ware.'
Sanitary ware. Well then okay, he had, there you go, he had things every day.
And then after when you look, actually the problem is when you research, you say Benoît Bazin actually he makes bento. It's like, wait, do I still have the, oh no, it's not there anymore, it's changed. We have another one in its place. So under the little cup, we have, it changes all the time. And it's, I read, is it true that 40% of the revenue has been renewed, meaning it's not the same companies since 2018, is that possible?
Indeed, we have bought a lot of companies since 2018 and we have sold a certain number. So in total, we have divested a little over 10 billion in revenue, so out of the 40 billion we had in 2018 and we were close to 50 billion in 2022 with exchange rates, it's rather 46-47 billion right now and we have bought 7 to 8 billion in revenue. And in fact, so today the positioning is global leader in sustainable construction. That's really our business.
So what is sustainable construction?
Fundamentally, what we do is invent, manufacture, distribute materials, services for construction. And sustainable construction is lighter, more frugal construction, which respects the circular economy and which fundamentally brings well-being, comfort for building occupants. So, it can be thermal comfort, it can be the acoustics of a classroom, it can be the visual quality to work well in the office with natural light and all this while being respectful of the environment and the planet. So after the products we make, well it's plasterboard, it's glazing, so it's roofing products, it's facade products, it's windows, it's partitions, it's flooring solutions, it's finally the entire building envelope. So building, your house, my house, in new construction, in renovation and also non-residential buildings, hospitals, schools, hotels, offices, data centers and then infrastructure. Airports, tunnels, we put a lot of products, so there you go, it's all this know-how of materials, of material sciences that we put at the disposal of construction.
Knowing that it's not a, it's a company but it's not really a brand. I mean, are there many products still stamped Saint-Gobain?
So, all our glass products are stamped Saint-Gobain and all our commercial brands, so the brands that all French people know, Isover, Placo for plasterboard, Isover, fiberglass, it's endorsed Saint-Gobain. Meaning we have the Isover brand and underneath it says Saint-Gobain. That way, we know we're in the same family. It's a bit like the game of this Saint-Gobain family. There's the insulation family, there's the plasterboard family, there's the ceiling family and all of it is endorsed Saint-Gobain. So we play as a team all together.
So we're going to talk a bit about all that indeed, about brand, about strategy because well we're also changing a multi-century, tri-century company, well making it pivot its activity, it's a heavy responsibility by the way. Well, you have to think about it. You shouldn't do it just based on fads or things like that. I'd like us to talk about the specifics of, perhaps of mergers and acquisitions. I was thinking about it this morning, I was saying well there are 900 factories, is that about right?
1,100 now. So we have big ones, medium ones, small ones. But I was saying in a, when we do mergers and acquisitions, we do what's called due diligence, so we have to look a bit at what we're buying or what we want, what we want, generally we know it. Well, how far do we go for example, are we going to visit every factory? Are we, well so there you go, I really have a lot of quite technical questions on that. And then how, what strategy, how to buy well, how to sell well, I imagine it's not necessarily easy. I'd like us to talk obviously about, well I don't know if we'll talk about ecology but about impact and because when you want to lead a group like this, we are still in perhaps the most polluting universe on the planet, construction.
Construction. Yes, it's very important.
So it's true that we often look at, there's a place we criticize which is the transport and aviation universe for example. Perhaps the simplest to regulate but but I think we're not even in the order of 1%, well 10% sorry, of pollution from construction. So seeing a bit what are really the levers, also seeing to what extent all this, well in which we can innovate. I'd like to talk a little bit about AI because I saw there had been some projects at your company for quite a long time actually, but but seeing to what extent all this can change things. I'll probably have plenty of other topics to address. But if you will, before that, I propose you introduce yourself.
So Benoît, there you go, 57 years old. I'm an engineer by training, engineer of the Corps des Ponts et Chaussées. After having done Polytechnique, I spent a few years in the administration on industry topics, small businesses, industrial restructuring that was in difficulty, large companies, privatizations in the aeronautics and defense sector. Then I had known Saint-Gobain for a year as an intern process engineer in factories. I liked the factory world and so I simply came back to Saint-Gobain in 1999 and I've had a career for almost 27 years now at Saint-Gobain in all sorts of functions in France and abroad. I spent quite a bit of time in the United States. I had finished my studies in the United States at MIT. So the United States is a country I like and where I feel at ease. We have a lot of things to do. I have a daughter who is 31 years old who is a doctor, who does all sorts of things around the world. And my wife also has two children of 19 and 23 in different sectors. The youngest does cinema. So there you go, it's a diverse family and I come from a family of four children of doctor parents. None were in the private sector. My parents were in public medicine, at the public hospital of Caen, at the CHU.
At the CHU. There you go.
My father was in intensive care, infectious diseases, rather a bit end of life unfortunately and my mother was a pediatrician in maternity, so at the beginning. And the four of us, well an older sister, we all did engineering studies, an older sister who teaches political science and then the younger ones, I have a brother at Schneider and a sister at Thalès. So the family contributes to French industry in a certain way.
You have to know what it is, for those who have passed by Caen, the CHU is a monument, it's really, you go around the ring road, you see, you see the sea by the way, the sailors spot it.
It's being, it's being dismantled.
And they are building a new, more intelligent hospital, actually more horizontal than vertical.
And that's part of, by the way, these hospital construction projects. I was talking about sustainable construction in non-residential, in the strategy that I pushed for 2030, what we call Lead 21, for the years until 2030, it's notably to capture more value and solutions on these non-residential buildings. We did for example the hospital in Nantes with 26 solutions because in a hospital, well you need products for air quality, for hygiene. You obviously need fire safety, you need comfort for caregivers and patients. You need to control the temperature, there are many things to do. So the CHU of Caen will be part of the projects on which we will be active.
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Interesting. Interesting. It's true that we can say it's a shame but it's still not a very beautiful building. Let's be honest compared to the magnificent abbeys we have, the CHU was a bit different.
It remains something we know, that we pass by, interesting.
So you, you did the Corps des Ponts et Chaussées you said, yes, Polytechnique and then the Corps des Ponts et Chaussées which is destined to go more into administration and then me actually I wanted to get interested in industry very early, I'd say you're one of the rare Ponts et Chaussées who stayed in the, in the universe because most of them end up either in administration or in construction.
A lot also now who go into digital, finally.
Exactly yes but me it's true that I was always interested in industry so that's why I wanted to do industry during that internship year where they ask you well before spending your whole life in administration, it's good that you know the private sector. And so I knew Saint-Gobain, really liked Saint-Gobain and I think the feeling was mutual.
I liked my boss at the time who had given me an internship bonus when I was leaving for the United States. It was important because I had gone into debt to go, I had a scholarship from the Ministry of Foreign Affairs but having this internship bonus was a bit the icing on the cake and then I came back to Saint-Gobain because it's really the industry I love.
So your studies were in the 70s, 80s?
There you go, sorry, no, I'm 80s. I entered Polytechnique in 89 so I got my bac in 86, there you go, so yes I'm old but not ancient.
No you're only 10 years older than me. Indeed, and there, MIT, when you go, you arrive at the Massachusetts Institute of Technology, it's Boston.
Yeah. After, well I took a hot shot, that's not going to be nice like that, I'm sorry. After Ponts et Chaussées, Polytechnique.
You could finish your curriculum at the Ponts. You could do another year at the end to do something else. And so either you redo mechanics, relatively traditional things, or you could. So it was on your own initiative. So I wanted to go abroad. And in fact the idea that came to me was that when I was at Polytechnique, there was a board of directors of the school and there were two representatives from each class. I had raised my hand and so I had represented the students on the board of directors and there were great leaders at the time. There was François Michelin, there was Bertrand Colomb and someone like Bertrand Colomb, he had finished his studies already in the 50s, 60s in the United States and I had said to myself, well, it's still quite nice to go international. I had a childhood friend who was French-American who had done part of his studies at Harvard. I, there you go, I wanted to go explore the New World in the United States. And the contrast is enormous. I mean when you arrive at MIT after French schools, it's, at that moment it's, it has nothing to do with it, it's better, it's different or the contrast is very striking in the way of teaching. So already the student population is completely international. Japanese, Chileans, Americans, Europeans, well from all over the world. That's very, very refreshing. And then especially the professors, it's a mix of consultants. I was, there was a professor who was leaving the government, well, they're industrialists who do it part-time and so on. So there's a fluidity of bridges between the academic world, the industrial world, the consulting world which means well, we're in case studies all the time and very connected with realities. So it's not academic courses, it's not scientific courses. I didn't learn much compared to my previous studies. On the other hand, it's very applied, it's very pragmatic and it's very in phase with real life afterwards because me, it's one of the things that struck me, what I try to bring to Saint-Gobain, we tend in France to have teachings that are actually quite theoretical. We don't move, we don't make decisions if we don't have 100% of the answers to 100% of the questions. Whereas in the United States, we're pragmatic, we have 60% of the answers, we decide, we correct as we go, we execute fast and so even in education it shows and then there's a part that values individuality which is very strong. In France, we're going to select the same kids at the same age on the same French, math or German exercise and so on.
In the United States, they're going to tell you, you, you have a personality, you're interested in industry, what do you want to do with it? And so typically, I had taken my walking stick and it interested me to see how American labs transferred know-how to very innovative small businesses. And so I had gone to see what NASA was doing, what the Small Business Administration was doing to say to myself, how do they manage to quickly pass from the academic world to the business world and I did it all alone and I had an MIT professor who valued me who told me 'Go see so-and-so, go see so-and-so'. So it wasn't the same for everyone, it was very individualized and so you develop your own talent. That's true and I believe it. Meaning that in France, you take a group, you tell them here's an exercise, here's how you should do it, here, and then we grade everyone on the same basis and I have the impression that the, and plus right now it's a bit the Chinese are moving very hard on education with AI.
Artificial intelligence should change everything there because we should be able even very early to individualize the understanding of each person.
I'm thinking of my daughter who, oh no, it's not yet, we started very early, who, no, the brevet. So we're both old, it's one-all. And so she starts in 20 minutes, in half an hour and I really pushed her hard to go review her weak subjects with AI because in fact there's a real individual understanding, AI will be able to grasp the curriculum. By the way, a year ago, it wasn't at all capable of doing that. Grasp the curriculum, see your weaknesses and bring you back up to level point by point.
It's, oh but it's interesting. And then what I found fascinating because after when I came back to live in the United States for Saint-Gobain because I worked several times in the United States for Saint-Gobain, I had friends who were professors in these great universities and who explained to me the selection processes. In fact, there were three criteria. One, the academic level of students. You have to be good, but it's not exceptional. Two, what kind of personality do you have? Are you on your video games alone until 2am or are you in a team, in a choir, well and then three in your extracurricular activities, what do you do and how far do you push it? If you're a painter, have you exhibited in Boston? If you're a 400m champion, are you jogging with your grandmother or are you really a 400m champion? And in fact, what interests the university is the individualities that will enrich my university. So it's not I select everyone on the same mold, it's how individualities will enrich my university and then the country after. So it's a quite different reasoning.
And that has become one of your reading grids today.
Yes and it's even a life grid. Meaning that I find we have both the possibility and the duty. So the tightrope is fine, we all have talents. We have to try to discover them, we have to try to make them flourish. And me as a CEO today, my role and it's almost the most fulfilling, the nicest, the most powerful role within Saint-Gobain, is to manage to ensure that each individuality discovers their talents. So it can be a great salesperson, it can be a great industrialist, I give them an environment of trust where people discover additional talents, saying wow I was capable of doing that, an acquisition, we're going to make it bigger, we're going to go a bit further, we went to Australia. So both individual talents and collective talents and so trying to ensure we create this universe of empowerment, of trust, of autonomy. We call it TEC at Saint-Gobain: Trust, Empowerment, Collaboration. I chose you. And the organization of Saint-Gobain today, which I changed 6 years ago, is entirely by country. We used to be by global product line. It was French people at the very top. We had somewhat complex, matrix, slow structures and we switched everything to a level of responsibility by country. And there, we chose in 90% of cases, it's the richness of the group, natives of their country. So it's a Polish woman in Poland. It's a Vietnamese man, Nguyen, in Vietnam, Marco Corales, a Mexican in Mexico. I trust them, trust, I empower them and they collaborate because they have all the autonomy. And so this capacity to make individual and collective talents flourish, me that's what I find very, very important.
So that's huge. I had read about it actually, this change. Wait, I'll come back to it right after. But so you told me 'Wait, diploma, activity and the third thing is well it's personality. Am I very individualistic? Do I play collectively? And how? There you go, am I, I remember, it was one of their criteria. Do I play video games alone until 2am or do I go out? Am I in a, I don't know what, a scout club, a choir, do I do charity? I help people. So there you go, am I a bit introverted, extroverted and how am I going to integrate and enrich the university I'm going to belong to?' It's interesting on video games. It's really one of the questions I ask myself. Nothing against video games.
No no but me I played, I played a bit until I had children. After, I wasn't obsessed but I know I played quite a bit but not at all as much as and what's funny is that in the world we entered which is very digital, I still received here a lot of, even startupers, well extremely brilliant and successful people, both by the way, who were completely addicted to video games, it's quite funny because it can also be a real asset, a real understanding because earlier for example we were talking with Red Bull teams and in fact video games in many universes can be a place where you can learn collaboration especially online now where you can learn and what it means behind, by the way, in this university criterion is that they try to understand who you are, you see, so what did you do academically, what did you do if you play violin, if you play saxophone, 400m or swimming and then and then your personality so it can be very introverted video games or on the contrary extroverted video games because you connect from New Zealand to the United States, but but who are you? And that's interesting because we're fundamentally interested in the person and we're going to try to value the person and help them discover their talents with all the support and then the means notably of these American universities.
Well then we're going to do the Benoît Bazin interview. Diploma, we have that. Activity. So what activity do you do, do you manage to have activities with your job?
Today it's difficult but me I, I work out physically so I like running, I like swimming. So that's a bit the two activities during the week. So I try to run 15-20 km one or two times on the weekend and then I also work out because I really love the mountains.
So I have a place I love now in Chamonix and I try to climb with guides, a friend guide for more than fifteen years. So there you go, the goal of working out during the year is also to say can I do one or two 4000ers next summer if mountain conditions allow. So that's a bit it but and then from time to time when I have a few lost hours, I take out my cello from its box because I did quite a bit of cello when I was a kid and so the cello remains a friend.
Chamonix is funny because we have a number of, it's a place of performance and the number of guests or people also that I've had here who have a link, near or far, with Chamonix is still quite significant.
Yeah. Chamonix is, yes, it's extraordinary. It's the mecca of mountains.
Yeah. It's high mountains.
Meaning there are many wonderful places in the Alps. Chamonix is high mountains. We're very quickly at the Aiguille du Midi, it's 3008. We're high mountains, we're on glaciers and then it's a place that lives all year round and I couldn't even count on the fingers of my hands all the outdoor activities you can do in Chamonix. And then climbing, mountaineering obviously, skiing, cross-country skiing, jogging in the forest, you can go rafting on the, on the torrent, you can go play tennis. There's a golf course, I don't play golf but there you go, it's really loving nature and you find yourself very quickly in nature in Chamonix. And then what's amusing about Chamonix is that there are all populations. There are Japanese tourists who come to admire Mont Blanc as they admire Mount Fuji. There's the mountaineer guy who comes down after 8 days of bivouac, unshaven with his disgusting bag and the pure backpackers. And then there's the ski touring and so it's a very, very international, very eclectic population. Anyway, I could talk for hours about Chamonix but and then there are in the, yeah that's it. In the outdoor world, there are many brands, Black Crow, Camille Jaccoux that we've received here. There are plenty of brands that were born there too. It's interesting. It's a place of experimentation.
It's a very authentic place of experimentation. Unfortunately, it's a place where I see climate change at full speed. The Mer de Glace, the first time I went there in 1990, there's the marker today. When you come back from a mountain race, you have to climb back up, it's 250 meters above the glacier. So in, it's not even a generation, in 30-35 years, we've lost 250 meters of ice thickness. It's absolutely monstrous. And now the mountain is collapsing. So you have to be very, very careful when you climb in summer because there are collapses. It's not even rockfalls anymore, it's entire sections. Well, we're in a heatwave in Paris. The first extremely strong signal in 2005, I don't know if you know what it is, the Dru, this magnificent wall. It's this peak of over 1000 meters that was the subject of extraordinary ascents.
Two-thirds of the wall collapsed in 2005. It covered Chamonix in dust. Why? Because the 2003 heatwave, it took 2 years for the heat to go melt all the ice crevices that hold the rock because the mountain isn't a monolithic block and then it fell. And so it's true that the mountain is an unfortunately accelerated witness of climate change. And well me who is very attached to that, Saint-Gobain is global leader in sustainable construction and we can do so much to preserve the planet that well I see it every day or every time I go to Chamonix. It's sure that the few climate skeptics that I've known, the mountain people were the first to change their minds, maybe something is happening after all because it's perhaps not just an exception.
And that's one of the topics because you have an international, global company, there are still places in the world where they tell you no there's no problem at all with the climate. Places that tax you quite a bit, you see. And when you lead a group like this towards empowerment and then a change, is it necessarily, by the way, do your products cost more? Is it necessarily, well what are the implications of all this of a strategy like that?
So no, products don't cost more and sustainable construction, for example, if I take energy efficiency, because indeed, you were saying earlier, the construction world is about 35% of CO2 emissions between material extraction, construction, well the manufacturing of materials and then the construction of the building, and then especially the life of the building, what we consume in energy, in air conditioning, all that makes 35% of CO2 emissions on the planet. So it's absolutely major to decarbonize construction. And the good news is that the technical solution exists. If I take for example in France a renovation of an individual house with the right building envelope, well it's attic insulation, we lose 30% of energy in the attics. We can, well we're talking about heatwaves today, we can lower the heat by 10 degrees in the attics by putting our Placo, Isover products. We lower 10 degrees. It's facade insulation with glazing, double glazing with solar control. We gain 5 degrees just behind the glazing. It's the insulation, 5 degrees, 10 degrees, the glazing.
So these aren't products to invent, they're products that exist today.
But what happened? Just a small step back. Where did we mess up? Well, I was quite a bit in the United States too in the 90s in families in Kansas, in Colorado, and indeed I remember discovering air-conditioned houses. I had this feeling, you know the big suburban houses there, you go to the places where you have houses one after another, they all lived in things like that. It was great, the best summers of my life. But I had the feeling of being really in cardboard houses. Meaning it was hot outside, but in the house, it was super hot. And so you had to put lots of air conditioners and you had, you see and you think back to caves or old French houses where actually nothing moves. It's hot in winter, it's cold in summer. What happened for us to end up there? And is it really, are we able to go back now? Because we're not going to make granite houses a priori?
No, we can very well make and all our work by the way is what we call light construction, light and sustainable construction. So it's light and sustainable construction. What does light construction mean? It means building by framework. Meaning the weight and the structure instead of having solid concrete and brick walls. So a lot of CO2 mass, a lot of mass, we can build by framework. It can be concrete pillars, it can be wood framing like American, Japanese or Norwegian houses, it can be steel framing for office constructions for example. But what's important after is to have the right thickness of the envelope. For example, if we put single glazing, as was certainly the case in these American houses, me it was also my first school exchange trip in second year to go to Ohio, I discovered these houses of American suburbs which are quite astonishing. But if we have double glazing with solar control, once again, we keep the heat outside in summer, we keep the heat inside in winter and everything is fine. So you have to put the right products. And so we can in a renovation of individual houses with about thirty Saint-Gobain products, all advised by Point P, we lower energy consumption by 70% with four-season comfort. So after you hear well how the group's brands slip in by the way.
But Point P isn't in the group anymore, is it?
Point P is in the group, yes absolutely. It's and we have in France, we have 2,000 points of sale and you'll see in a moment, I have a surprise for your listeners, we have 2,000 points of sale where we can train artisans in the good gestures of energy renovation. So today, we have for example at the construction platform what we call the DPE jump. DPE is the energy performance diagnosis. We help artisans help individuals who want to do a renovation to gain two or three energy performance classes. And so have a lower bill, it's good for the wallet and purchasing power. It's good because less heat is emitted and therefore less CO2, it preserves the planet and then especially it brings comfort. You can read your newspaper next to the window in winter and not be 1.50 meters away because the window is cold and so on.
And if I were to, because I imagine common sense speaks to you a bit, but if I were to go in the right direction, we could also say that we need smaller windows or non, or it's not even necessary anymore. Does it, well creating windows like that, does it pollute?
No but what you need is to think about how you build your building. If you ask me Benoît, can Saint-Gobain make us a passive house in Manchester, in Angers, in Grenoble or or in Boston? Yes. A passive house. So it's a house that will produce more energy for example with a solar panel on the roof than it consumes. But we're not going to put a super large glass facade on the south face.
We're going to put it on the west or on the north. So we're going to think about all that. So we can very well orient and at that moment with the right solar control glazing, the right exterior facade insulation, attic insulation, we lose 30% of energy in the attics, we lose 20% on the facade. So all these gestures, they're important. And it's a bit what we promoted with the French authorities, the scientific and technical council of construction, it's do a global renovation with the entire envelope. Sometimes, we don't have the means to do everything at once. You have to do it in the right steps with what's most performant and so notably attic and roof insulation.
The passive house, I don't remember, I talked about it with people and they told me it's not exactly true, it's not a reality. Today, it's completely possible.
It's technically possible. After, it's not necessarily desirable to impose it everywhere. But what I want to say is that the good news in the construction world which indeed has a huge responsibility in terms of reducing CO2 is that the technical solution exists.
Hmm. So, we can go as far as the passive house, unlike other sectors where we're still very far from knowing technically how to decarbonize. We decarbonized our materials. Saint-Gobain lowered its CO2 footprint by 35% over the last few years and we lowered the energy consumption of the house by 70%. The challenge in construction is a challenge of scale, of volume because we're talking about hundreds of thousands of construction sites in France, millions in the world and then a very fragmented value chain because there's the individual who doesn't know, the artisan who isn't always very well trained, the architect who's a bit afraid, the banker who doesn't really care about the DPE of your house when he gives you a mortgage, he should if he wants to participate in the contribution to preserving the planet.
Especially even very basically financially the DPE, yes.
There you go, at the exit if he wants to accompany you but well you'll repay your loan more easily because you'll have fewer bills to pay on gas or electricity and then on top of that your house will gain almost 30% in value between a good DPE and a bad one.
The DPE for those who don't know being the energy performance diagnosis, it's a bit like when we buy or sell a building, a house, well there you go, so today we shouldn't be beyond E.
Well we're between A and G and we should be rather at D, E, E, it's the bottom of the range that F or G. and it's really becoming standard practice.
Meaning that in the same way, we won't buy a house if there are flood risks, if there are termites, if there are seismic risks in certain places, you have to know. Well, we're going to look at the DPE and that's what means that compared to the price announced by the real estate agency, we can have gaps of 30% between a great very performant property and then a property on which well I'm going to have to spend if I want to pass it on one day to my children in good condition. So after a renovation of an individual house, it's accessible. It's a house of 120-140 m², well it's not nothing either, but we can do something good with 30-40,000 euros. And so there, what I'd like is that the financiers can say well, you borrowed 300,000 euros to buy your house, 400,000 euros, I add 40,000 euros to do the attic insulation, to change the south facade windows. And then if we can't do everything, well when you've repaid a part of the loan, in 5 or 10 years, I propose a top-up to say well let's do the other windows, let's do the wall insulation and so on. So there are many things to do. We had even pleaded, you see, for an energy renovation passport. Like we have children's vaccination records with boosters, measles and so on, we could have a passport to say well there you go, you did the right things, you have to continue and there if you do three more things, you'll have a perfect renovation.
30-40,000 euros, it shouldn't work on...
In the Paris region, I think so because if I have an apartment in the 18th arrondissement, I renovated it a bit. We perhaps gained one energy rating class, but then I think about the attic and the windows I haven't done.
Well, that's rather the co-ownership that has to do it. You have to do the attic. Indeed, in Parisian buildings, it's the attic, it's all the woodwork, so the windows. It can be the collective heating system or the individual heating system, but you have to start with the attic first.
There are all sorts of exterior gables because people will tell you 'Oh, the Haussmannian facade, you obviously can't do exterior insulation.' But there are often interior facades on courtyards where you can do exterior insulation. That's up to the co-owners to decide, but there are many things to do, including on older buildings.
If I go back to our discussion earlier when we were talking about construction, just to be clear since it's your profession and you're an engineer so you must know it well. Before, we used stones, we started by stacking stones, we put them like that. Then, recently, there were quite a few things where we used a lot of cement, filling concrete blocks, bricks, and then putting a little plaster on the outside.
No, but we can change, for example, Point P has launched constructions in raw earth.
That means you take the excavation soil almost from the garden or the land you're going to buy to build a house. Well, you crush it, you filter it, and the advantage of this construction, it's a product called Terre Liant, is that raw earth has a lot of thermal inertia. So when we talk about heatwaves, if we're still on the current topic, well you need to insulate but you also need thermal inertia. It works both ways. You're talking about heatwaves but the idea was when it's very cold or... and it's true that the walls of old castles, when they were 3 meters thick, had very high thermal inertia, but you can have more with raw earth than with a concrete block or hollow brick.
You can have a lot of thermal inertia. So you need to insulate, gain thermal inertia, and then the last little gesture is to have in a house what we call thermal mass. That is to say materials that won't release heat during the day, but rather release it a little at night to avoid heat accumulation because at night it's a bit cooler. So if we put, for example, a slightly thick plasterboard, we'll have absorption in the mass and a thermal mass effect of heat release. So there are many possibilities for insulating, ventilating, thermal inertia, and ultimately construction methods that have evolved quite a bit.
Interesting. The difficulty ultimately is the old buildings because you arrived here, you were hot, you were hot this morning, that's what you told us a bit hot, you can't necessarily, even the boss of Saint-Gobain can't necessarily be at home in the cool all the time or it's more difficult.
I don't have air conditioning but I think we can function without it, but it might be topics for one day. But there are many things to do on building renovation and especially public buildings. We have advocated for many years for the renovation of schools.
I had gone to see the Secretary of Ecological Planning to say we need to put 10 billion per year into schools and educational buildings and health buildings because public buildings are 70% health or educational establishments. Well, we launched some renovation, I think about 1,500 schools out of 40,000 have been renovated, but there are many, many things to do on public buildings for health and education.
And in history, when did we lose our way? That's what I was asking you a bit earlier, meaning I don't know, you were telling me where you come from, so that's why we knew this hospital earlier. There was a whole period of reconstruction of a city totally demolished during the war, I could say like that but I'm probably wrong.
What is it, what is it? The facades there, over there, it looks like limestone but you see, beautiful limestone stones.
And that, you say it could perhaps insulate, perhaps not so badly. I mean it's in the 70s, 80s, 90s where we did whatever.
No, we did some first things with the first oil crisis in the early 70s, both in energy efficiency and in sobriety. You're too young but I lived through it, there were even energy sobriety stickers at school. I think we need to find these energy sobriety gestures today because everyone can make efforts in terms of sobriety. That means a little less heating in winter. It means being careful about certain gestures during the life of buildings. Not setting the air conditioning to 18 or 25 degrees. Today in the buildings in La Défense, it's 26 degrees with air conditioning and so on.
So the sobriety is here for everyone. Matthieu can testify. I explain to everyone already that it's useless because it never goes down to 18, at 18 it's too cold actually, and at 25 we're very comfortable.
Exactly. No, afterwards we lost a bit of time on energy efficiency criteria. We then reintroduced thermal regulations in 2005. So from 2005 there were many efforts on energy renovation. It tapered off a bit and then since 2020 we've piled up all sorts of regulations and we've zigzagged a lot.
In recent years, if I take the example of MaPrimeRénov, it was notably for modest incomes, a little catalyst, a subsidy to help with the 30,000 or 40,000 euros of work I mentioned, well you could have 2,000, 3,000, 5,000 euros depending on your income as support, which is still very important to take the step and do the work. MaPrimeRénov, the government changed the criteria 16 times in 5 years. So that means we lose everyone, we zigzag.
Was that where there were quite a few scams? I mean people who... that's the difficulty in there, but...
There are always, unfortunately, on these topics at the margins of the system, there are always, I was going to say shady characters, but you shouldn't kill the systems on that pretext. The artisans are serious people, they work, they're competent, they're in prison... no, that's all. But yes, you need to...
No, but we asked ANAH, it's the construction, that's the problem afterwards.
No, but it's giving more resources. The National Agency for Housing Improvement, we asked it to implement MaPrimeRénov, it doesn't have the resources to analyze the files. So when you don't have time, well there are files that are more or less well put together. But in the vast majority of cases, people wanted to do well. The artisans are competent, courageous, they train. We train more than 15,000 each year in our agencies. PCDO, the building platform. So there's a whole system, the French Federation of Building, the CAPEB which is eager to move forward.
So we had thermal regulations that were good in 2005. From 2020, we piled up things that were a bit too much, I think, driven by the absolute objective of CO2. Now, it's good to worry about CO2, but CO2 and therefore the preservation of CO2 emissions for the planet, for me, is a result of what we need to do in energy efficiency and comfort for inhabitants.
I think that in all our sustainability topics, we need to first think about what well-being, what improvement I bring to the person. I remember 3 or 4 years ago, the government wanted to ban gas boilers. There are all sorts of places in the countryside that just switched from gas tanks to mains gas. And if we have a very efficient gas boiler, what's important is what I do in insulation and energy efficiency of my house that allows me to lower energy consumption, lower my bill. So I gain comfort and I gain purchasing power.
Afterwards, well it's better if it's gas than oil. It's better if it's an electric heat pump with decarbonized electricity in France rather than gas. But fundamentally, you have to tell yourself what improvement do I bring to the person? And that, we forgot a bit over the last 5 years. We then zigzagged a lot and so we lost time.
So if I take a step back, since 1990, we've reduced CO2 emissions from buildings by 20 to 30%. So buildings have made progress but we can and must go faster.
But then you who operate worldwide, where is it done well? Where do governments work well?
Well, it's true that we're lucky to have an international perspective. Germany in the 90s had much more demanding thermal regulations. We have, for example, a lot of triple glazing in Germany, triple glazing in Nordic countries. So Nordic countries and Germany advanced faster than us. Germany notably had financing from all the regional savings banks that helped individuals with energy renovation. And we see that the financing issue in France isn't completely resolved because it can't just be state subsidies. So typically Germany, Nordic countries advanced quickly on these energy efficiency topics.
Interesting. And in the rest of the world outside Europe?
No, it's not their topic much.
The United States paradoxically, because you were saying that earlier, it's true that there are debates about where climate change comes from. Is it human factor? Well, I won't get into these potentially controversial topics. We can clearly see that the human factor accelerates things. When we look state by state, county by county in the United States, they're aware of the impacts of climate change. There's an acceleration of extreme climate events, tornadoes, hailstorms, hurricanes, which means people must act and adapt.
So we've moved to phases of resilience, adaptation. There are even 14 states in the southern United States that have developed standards for what they call fortified homes, so houses that are robust against tornadoes. And there, it's a roofing system that resists winds of 200 miles per hour rather than 125, with waterproofing underneath, with structural systems that allow, it's all Saint-Gobain products, to attach products together well. And when you do that, you get tax advantages on property tax.
So even in the United States, this adaptation, without debating where climate change comes from and how we measure CO2 in the west or south of your house, these climate change adaptation topics are very pressing and very present and really a value criterion.
I had invited, it's interesting, to the Saint-Gobain board of directors, the American head of the organization we call LEED, which is Leadership in Energy and Environmental Design.
And he was saying in the United States, if you own office real estate, you have 25% more value, so in the rent you charge, if you have the right energy and environmental performance criteria. Why? Because the air quality will be more pleasant, because the energy cost for the occupant will be better, because the environment will be more pleasant. And so even in the United States, even in office real estate, these environmental and energy performance criteria are recognized and have value. So these topics, including in the United States, are moving fast and not just in California.
What I find difficult in all these very technical topics, you see, I've done quite a bit of office and residential real estate, is that you follow people who advise you but whose advice is always a bit oriented. You know what I mean? You never know exactly, I don't know, up there, we installed a condensation air conditioning unit. The guy tells me 'No don't worry, condensation, it's not the high-end air conditioners and so on.' I'm not very sure I didn't end up with something very clean, you know. Well clean, no, but...
There are also several solutions. There isn't just one unique solution, but fundamentally in construction, we're dealing with physical reality. It's important to think long-term. And that's why I was talking about when there are regulations but then renovation after renovation, we need a stable, visible framework. So fundamentally, if we're going to go faster, it's true in our sector, let's set ourselves the 2030-2035 endpoint, we don't change it. And at that point, the whole industry, if I'm an artisan, I train a young person in apprenticeship, I hire them because I know that for the next 10 years, here's the work they can have.
The industrialists will have standards, they'll lower costs because they'll have more volume. We, for example, had to close a few years ago a factory that made blown wool. Blown wool allows you to insulate attics, except if you want to make it an office. Attics are often lost rooms, so to speak. You can insulate attics in half a day with blown wool. We had built a new factory, we had to close it because the government in the technical criteria decided attic insulation was no longer necessary. We lose 30% of energy through the roof. It's an aberration. So we went down the wrong path on a number of subjects thinking about CO2 at a certain time.
But why then, why does the government decide that? Do you know the reason when you talk to them, I imagine?
I think we sometimes have bad analysis criteria. That means at one point it was a bit all about CO2 in Europe, we thought CO2, we thought planet CO2. We didn't think comfort, performance, energy sobriety.
Then recently, we said electrification, it won't be gas from the Strait of Hormuz, nor from Russia, nor from the United States. Electrification, and we're lucky to have decarbonized electricity in France and in sufficient quantity since we export it. But electrification doesn't address heatwaves.
So you see, we sometimes make mistakes by saying there's only one topic, it's CO2. Ah now it's energy sovereignty, independence and therefore electrification. That's not enough. And we say, and all construction professionals say it, we need a global renovation, the right gestures in the right order, step by step.
Once again, I received at home a little brochure from ADEME 5 or 6 years ago to tell me Benoît, you're losing 30% of energy through your roof. 20% through the facade, 15% through the floor. Once you've done all that well, you change your heating system. That's the order in which things need to be done. So sometimes we want to go too fast, we install a heat pump, that's good, but a heat pump in a poorly insulated house energy-wise.
Well yes. It's like driving your car with the air conditioning on full blast but the windows open. And the tank leaking.
Exactly. And so you need to lower energy consumption with the building envelope against the cold, against the heat. And once you've done that, you won't oversize the heat pump, you'll save on the electricity bill and you'll have well-being. So that's what needs to be done in the right order and not rush into just one topic, CO2 before, electrification today.
So sometimes you push a bit, it's a little elbow game with your friends, the boss of CAC 40 companies who for some are more trying to sell electricity, others who say everyone has their interests and it clashes. That's also what you're going to... it's collective.
Yes but you need to play collectively. What I said and what I mentioned earlier is that in the construction world, there isn't one single company, it's not Saint-Gobain that will meet all the planet's needs, even though we're very active in 80 countries.
But what I mean is that you can, I'm at the head of a company that makes energy. Ultimately, if there are lots of energy sieves, I'm happy. I sell more energy, you see.
Yes, but it will be disappointing. That means at some point, we mustn't end up with French people in 10 years saying 'Well, I have a heat pump but I'm not sure it's working well, it's the quarterly results and things like that. I don't care what happens in 5 years.' You see, it's also...
That's why in Europe, in France, in each country we need a bit of regulation to say the thermal regulation 2020, 2025, 2030, that's summer comfort. There are now summer comfort topics in the regulations. Well you need thermal inertia so you need to play collectively. That's the right solution.
The problem is that, well at the level because I was telling you at the company level it's every quarter. At the state level it's every 5 years or less because with dissolutions there's no more. It's true that we went to China, we made a big trip there, a film that I recommend, I think your collaborators saw it, about how China became unbeatable. Now, I don't wish to live in an authoritarian regime but it's true that you tell yourself some places it's simpler. You say well in 10 years we'll do this for 10 years and it doesn't change. Right now it's a bit of a mess in France notably but...
We need visibility, stability and it's true that even 5 years when we invest, when I look at a country I look at the country as a frame, like the frame of a painting. And that's what I often tell the government, including in France, your job isn't to know the painting, the picture, whether we're going to put a Picasso, a Pissarro inside. It's to make us a competitive framework. It's labor costs and taxation. It's infrastructure, ports, highways, airports. It's energy and it's education. And you have the duty to work on this framework, to make it attractive, competitive and inside, innovation, commitment, competition, we'll do very well.
Does it cost you today? I understand this framework that doesn't exist, but does it cost you to have, really to have a National Assembly so fragmented, to have decisions... then I'm speaking about France but also...
Well, there are several things without really talking about politics, just the reality of what's happening. What isn't easy is that the world is moving at full speed, whether it's the United States, India, I had the chance to spend half an hour face-to-face with Prime Minister Modi last week. It's extraordinary. Extraordinary. I heard him on a podcast for 4 hours. He's extraordinary and I was impressed by the way he talked to me about the circular economy, about what Saint-Gobain can bring to India. It's our third country of results, India. We double our size in India every 5 years and we've been there for more than three decades.
But all these countries, China, India, the United States are moving at full speed. And so in Europe, in France, we need speed, decision-making. We also need long-term vision. And so it's true that we can gain competitiveness, attractiveness of the country and of Europe if we have more decision-making speed without losing our democratic principles which are a real wealth and having a long-term vision.
There's zero decision-making speed in France.
It's true that over the last 18-24 months, we've spent a lot of time going around in circles. So we need to find momentum again, find long-term vision. Well, it takes political courage to give a collective narrative to the country. I believe strongly at Saint-Gobain, our purpose is making the world a better home. And it's not just displayed or written in the Saint-Gobain annual report, it's displayed in our factories, in our logistics centers, in our 2,000 Point P, Cedeo, building platform sales points in France. And that's what mobilizes our teams.
And for example, you were talking about the climate earlier, we had the Climate Fresk done for more than 80% of our employees. Because I want our employees, whether they're in Vietnam, Argentina, Mexico, the United States, to be ambassadors of what sustainable construction, good Saint-Gobain products can bring to the planet. So that's the mobilization in a collective narrative that carries the future.
And the last trip we just made, we haven't released the film yet, it will be in September, it's about Europe.
You're talking a lot about France, the French framework, on construction, you're mainly on a French framework. Does Europe touch you somewhere or...
Europe has given broad guidelines for housing renovation. So that's rather good, it's up to each country to implement it. Sometimes it's done a bit fragmentarily between different countries, but Europe has taken hold of the energy performance topic in buildings. It couldn't be a European topic and then we stop talking about it everywhere.
So Europe gave a framework, it asked each state to implement it in national plans because it's true we won't do energy renovation in Norway the same way as in Spain.
But we can have the... Yes. What you're saying, there are the broad principles and then more recently, which shows how much the topic is a crisis topic, Europe has taken hold of the housing crisis. It's not in its European prerogative, it's in each state. But Europe said 'Wait, there's a real social housing crisis.' It's true in France, it's true in the UK, it's true in Germany, we haven't built enough. So young people today are neglected in terms of housing. We have 200,000 people in France on the waiting list for social housing and so Europe also took hold of housing in terms of new construction.
So it's true that Europe pushes quite hard on building renovation. 80% of buildings that will be there in 2050 exist today. So we need to renovate them. After, the difficulty in the construction world, what I see when I talk to Ursula von der Leyen or to different politicians, is that housing is very, very fragmented. You see renovating Mathieu's house isn't as politically attractive and sellable as attracting a gigafactory or an electric battery company.
It's true. If tomorrow I build a passive house, maybe that would be nice. But what I often tell them is it's true that it's not super glamorous because it's hundreds of thousands, millions of... compared to I attracted the latest gigafactory and so on for electric batteries but working on Benoit Loman's factory up there in Vercors, no you don't know, or other things and it's important to do it, it's important to do it but it's still the daily life of 450 million European citizens, we spend 90% of our time in buildings, in office buildings, education buildings, hospitals or at home. So taking care of the daily life of your citizens in France, abroad, in Europe, is crucial.
When we have this well-being together, I think we can build a lot for the country in terms of innovation, competitiveness. So we see even that it was underestimated. We lose economic power of the country when we don't have enough housing. We have today, it's a statistic that absolutely shocked me, 70% of job seekers find a job in a nearby city. I'm in Périgueux, I have social housing, I won't take the job in Limoges because I won't have social housing in Limoges. All because there isn't enough housing. And so we see that we're cutting the country's economic growth when we don't have enough housing. We're cutting birth rates. I've been saying for years, be careful, demographics in France, which we were very proud of, are starting to decline. Birth rates are declining because there isn't enough housing.
So let's be careful. Europe has become aware of this, but I think even if it's changing, we haven't put housing renovation and new construction in the right place in terms of political priority in recent years. It's changing but not fast enough. And it's true in the United States too, it's true in many countries.
OK. So you find that Europe ultimately at least in your universe remains an OK framework that works? Because...
It remains a framework that isn't perfect but on which we're working and which works and which doesn't cause regulatory problems. It's the big trend right now. Everyone bashes European regulations. We did a lot again in 2020 on CO2, too much because it's not just CO2 that counts as I say. It's what we bring to people in their buildings. That has fortunately tapered off a bit, we must do better and then now move to action. So I think we have enough regulations. Execution, execution.
And regarding what we discussed at the beginning of our conversation about American education, well we need to stop being theoretical in France or Europe and move to execution, fewer directives but execute them fully. The European renovation plan for housing hasn't been implemented in all European countries as national renovation plans. So there, execution now.
Maybe also that I see a lot of people who are more in companies. You have a growing company but there are scale-ups or companies that really... and once you're well established throughout Europe, maybe the framework is interesting. I think for many the difficulty is what we say, it's not at all a single market, meaning it remains very fragmented, 27 different markets and when you want to grow and you don't have a legal department, an HR department, a department in each country, well there's no way, you can't become, you're not a European company, you're a French company that goes to Germany, that goes to... these are topics we push a lot.
I belong to what we call the European Round Table, so the 60 largest European industrial companies. We have the Franco-German meetings in Évian. So it's the 60 most important Franco-German companies. We push a lot on these topics. Let's make a real single European market, a capital market. Today, we have a 40 to 50% valuation gap between American companies and European companies because there isn't a single capital market and therefore not enough equity to invest in startups, in artificial intelligence. So capital market, a unified market.
We're lucky, we must recognize it. I'm very European and the euro is a tremendous success. Let's now make a unified market for goods that circulate. We need to invest in energy to make European energy more competitive. So there, there are still many things to do.
What is a unified market for goods that circulate?
Well it's not having different regulations between France and Germany on construction, plasterboard or all sorts of topics. We still have very fragmented things. And so when I look at the profitability differences between Europe and the United States, investors often ask us the question, well in the United States, we'll have a plasterboard factory in Denmark, then another in Sweden, then in Norway, then in Finland. They'll be small, it'll be 20-30 million square meters of capacity. In the United States, it'll be 200-300 million square meters of capacity. And at that point, we'll fill factories with economies of scale that lower costs.
But because in Denmark, we'll make specific products for Denmark and then Sweden will be different and Germany too with different standards. Industrialists, we have our responsibility because very often it was a way to put an NF standard in France to prevent Germans from competing with us. So we need to modernize all this to have a real European market and at that point lower costs.
Also protect this European market against sometimes Chinese who come with somewhat unfair procedures or dumping. We're lucky to have the largest market in the world. So we need to play it fully. We estimate about 20% equivalent of internal tariff barriers within Europe. We complain a lot about American tariff barriers, but we have 20%, the equivalent of 20% tariff barriers through this fragmentation of European markets and that's in our hands, it's up to us Europeans to...
I'll rephrase what you're saying, that in fact this market fragmentation results in a form of tariff barrier, meaning you effectively have a 20% customs duty because you have to adapt to each market.
And so we could lower costs by 20% or gain 20% competitiveness. We need to work on this. We also need to allow European champions. When we look at company mergers for example, we advocate for reviewing European competition policy a bit which has fundamentally favored the European consumer, not enough the producer. So supply-side policy, we talk about it a lot in France but also in Europe. We need to give back the capacity to European champions.
There are many in the construction sector, it's Saint-Gobain in France, it's Velux in Denmark, there are many very fine companies. Well we need to give back the capacity to these European champions to win internationally by probably reviewing European competition policy and then moving out of this fragmentation of the European market.
On our exchanges with... when we went to China and came back, we take certain sectors perhaps more technological, notably the automobile which is becoming very technological. We see quite a few... we had the chance this week to present this film at the Senate.
The Senate, by the way, I was thinking about what you said earlier, it was relatively cool inside because it was well built, I think. We were there on a heatwave day and we were saying...
Someone I received here, Mingpo Cai, do you know him? Well, Mingpo who is Chinese, we even invested in a fund with him in China, CATE, to benefit from this whole ecosystem.
Mingpo told me 6 months ago, he said you absolutely must force Chinese manufacturers, automotive and others, if they want to sell in Europe, they must invest in Europe, build in Europe, with technology transfer and a joint venture potentially with a European company as majority shareholder.
I was quite surprised that a Chinese person who knows the ambassador well, people like that, tell me this here at my microphone publicly because I thought it was... and when we went to China, there were really many Chinese who told us this, to the point where at one moment I thought it might be a way to colonize us, I don't know.
Well no, you did it to us for years, it's doing the symmetrical and reciprocal of what was done for years.
